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Anti-crisis shield and lease agreements

06 April 2020
The "anti-crisis shield" ("Act") was signed yesterday by the Polish President and has already entered into force. It contains a number of solutions that affect businesses and this article looks at the most important regulations concerning commercial leases.
 

Temporary expiry of lease agreements

In accordance with the Act, during the ban on conducting activity in shopping centres with a sales area of more than 2000 m2, the mutual obligations of the parties to the lease, tenancy or other similar agreement regarding premises in the shopping centres, shall temporarily expire.

In practice, it means that during this period tenants will be released from i.a.the obligation to pay lease rent and service charges.

The wording used in the provisions of the Act allows adoption of a thesis that the expiry of lease and similar agreements may apply both to tenants whose activity has been significantly limited during the state of epidemic emergency and the state of epidemic and to tenants who have been able to continue their activity in shopping centres.

After the ban on conducting economic activity is lifted, the current tenants of premises in the shopping centres will be obliged to submit an offer for extension of the temporarily expired legal relation, on the terms and conditions resulting from the existing agreement – by the period of duration of the ban on conducting activity, extended by six months. If this offer is not submitted within three months from the date of lifting the ban, the agreements will be considered as not temporarily expired.

For the tenants it means that they must comply with the deadline for the submission of the above offer, and does not signify the opportunity to cease their activity in the specific facility. Otherwise, those agreements will be treated as if they have never expired, which would lead i.a. to the obligation to pay rent and other charges for the entire duration of the restrictions on conducting activity in the shopping centres.

The Act does not contain any solutions which would solve practical problems that the parties are likely to face in this transitional period, such as whether or not in connection with the temporary expiration of the agreements: (i) the parties should make their final settlement, (ii) the premises should be returned to the landlord, (iii) the landlord is entitled to charge an additional remuneration (often 150% or 200% of rent) in the absence of such a return, or (iv) the tenant shall be charged with the costs of storing the goods and other items of the tenant.

The Act does not include similar solutions for tenants of, e.g. catering facilities located outside shopping centres, which - with some exceptions - are banned from operating regardless of the location of the premises. 

Protection of the lease relation

Extension of the lease term

Under the Act, if the term of a lease agreement concluded before the date of entry into force of the new discussed regulations expires after their entry into force, the lease term will be extended until 30 June 2020. The extension will be made on the basis of the tenant's declaration of intent.

However, this provision will not apply in cases specifically listed in the act – for example if the tenant has used the premises in a manner contrary to the agreement or contrary to the designation of the premises.

Ban on termination of lease agreements and the amount of rent

The Act provides that, as a rule, until 30 June 2020, it will not be possible to terminate the tenant's lease or the amount of rent. This shall not apply if a lease agreement is to be terminated due to the tenant's breach of the provisions of the lease agreement or legal regulations concerning the manner of using the premises or the necessity to demolish or renovate the building in which the premises are located.

New limitations within the scope of permitted economic activity

As of today (6 April 2020), new restrictions regarding permitted economic activity, introduced by the Regulation of the Council of Ministers dated 31 March 2020 ("Regulation"), also came into force. Currently, the restrictions also include, among others, economic activity in the field of hairdressing and beauty treatments, as well as operation of hotel services.

Additionally, in accordance with the Regulation, the retail trade in commercial facilities with sales area of more than 2000 m2, where the prevailing activity consists in sale of construction and renovation articles (so called DIY stores), is prohibited on Saturdays and Sundays.
 
The full text of the Draft (in Polish) is available here: http://dziennikustaw.gov.pl/D2020000056801.pdf
 
The full text of the Regulation (in Polish) is available here: http://dziennikustaw.gov.pl/D2020000056601.pdf

To read this update in Polish, download our PDF >

 

For more information please do not hesitate to contact one of our experts below.

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